it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> good morning and welcome to "daybreak: europe", i'm kriti gupta in london. israel expands operations across the gaza strip with a ground

invasion inspected in the south. gazans warned to evacuate yet again. gold jumps to a fresh record. bitcoin surging. investors were looking for yields as a occasions of rate cuts grow globally. cop controversy, new comments by the president of the climate summit to phase out fossil fuels altogether. bill gates says the world probably won't meet its goal of keeping temperatures below two degrees. >> the aspirational target. you can do the math on 1.5 and even 2.0 isn't that likely. >> there is a lot of things to digest especially when you talk about the readthrough to the broader economy. let's talk about how markets are thinking, because when it comes to futures, it is an interesting

picture. the last 48 hours investors digested comments from chair powell, the data yesterday as well. when we look at euro stoxx 50 futures, virtually unchanged, 4420 five. slight underperformance in the u.k., ftse 100 futures down 0.1%. the real underperformance design and the states. this feels more technical and fundamental because you did see a massive rally last week. it's pretty normal to have a little pullback. it kind of feels like that's what futures are doing although we are in a back half of the year where asian and europe in investors in futures trading have not dove into american assets, that is important when you talk about equities because americans are the ones that hop into futures trading not at this type of power. we will see the narrative change in 30 minutes, but a lot of the action will be on the bond market. this morning, the commodity market. interesting when we talk about the fact that investors are leaning into this idea that the fed is going to cut, and by extension, so are all the other

central banks. so you see a two-year yield that 4.6, it is higher by six basis points but that is a retracement of last week. the bigger movies is in gold where you have 2088. bitcoin surging as well when you have the market doubling down on rate cut bets you will see nontraditional assets like gold that have been underperforming get a bid because people are looking for that return they might not find any longer in the bond market. that's a crucial piece of the equation when we talk about the cross assets picture, as is the readthrough from geopolitics. that's where i want to go next, specifically the middle east. israel's military is expanding operations across gaza with the expectation of a looming ground invasion in the south of the strip, after it warmed many of that 2.2 million residents to evacuate. antony sguezzin joins us from tel aviv. can you walk us through the idf's strategy in gaza?

>> what they are doing is they are beginning to attack the south with airstrikes and other ordnance. it's not clear when and if they will proceed with a ground invasion there is 1.8 million people crowded into a small area and the chances of casualties are high. they are taking care. they have set up safe zones. there is an online map where people can go. they are trying to warn people when they are going to strike. ultimately, it's difficult and there is norma's criticism because of the casualties we saw in the north. kriti: as a function of that, 2.2 million citizens are displaced, where do the gazans go? >> there isn't really much space for them to go anywhere else. there are small areas the idf

has set aside. they have pushed people into going, but it's a difficult situation, as i said, humanitarian agencies are concerned and critical of israel. kriti: when we are talking about the internal dynamics of the war, we have to talk about the broader repercussions for the world. there were attacks this weekend on ships in the red sea claimed by the houthi rebels, there was concerned whether a u.s. military ship was targeted. is this a sign of growing regional escalation? >> it's definitely some sort of escalation. i wouldn't overplay it. there have been a few attacks on ships. this is of a different magnitude, a lot of damage was done, but a couple of commercial ships were targeted. no real damage done. the u.s. sent its drones.

obviously, that's real concerning. the houthis have claimed they are targeting israeli ships. it is quite often hard to tell who actually owns a ship. they change ownership often and have different flags. it is concerning for the international shipping industry because that particular passageway is extremely important to the industry. kriti: it is something we will be keeping a close eye on as the geopolitics don't seem to be abating soon. a super dire humanitarian situation in the middle east. antony sguezzin in tel aviv joining us. i want to go on the conversation about the israel-hamas war to one of the biggest climate summits in history. let's head now to cop28, in dubai, specifically. china's energy company envision playing a role in shifting original equipment manufacturers to power wind projects. francine lacqua is on the ground at cop28 in dubai.

fran, good morning. francine: i'm here with the chief executive officer lei zhang. there is so much going on in the green space. a lot of questions about what the energy complex will look like longer term. how are you looking at decarbonization and the transition? lei: make us have more reflections. if you look at the day, the weather check is for renewable electricity, wind and solar is going okay. for base metals, shipping, steel, cement, this segment is well off the track. but [indiscernible] green hydrogen, green amoonium,

green aviation oil or shipping fuel. this has become very important. we see in the future that emphasis shall be focusing on green molecules. we are solving the battle for green electrons. we have this challenge for green molecules. francine: tom much cheaper does green hydrogen have to be to be scalable to have large-scale investment that makes difference in terms of energy use? lei: today, the cost for producing green molecules is different in regions. for some regions, for instance in mongolia two days ago we commissioned the world's largest green ammonium hydrogen project. we are able to meet the price challenge.

give us two or three years time, we should be able to achieve green hydrogen. francine: which will be a game changer. where does that leave wind turbines? margins on wind turbines in your part of the world have gone down since 2021. how much of a problem is that? lei: which is good for green molecules. 80% of the cost of green molecules is coming from electricity costs, green electricity. if you build a wind turbine become a small fraction of the total capex, your molecule cost is much lower. so the future of wind turbine as 30-40% will be usable for green solutions. they are be a part of the renewable energy system, wind turbine, solar panels, storage

system. system to produce electricity which is used for green molecules. francine: will you sell wind turbines to other countries? or will that slowly go down? lei: the wind turbine is still early days. you see the latest people's expectation. by 2030, wind and solar is going to be triple. still long haul for wind turbines. innovation for the wind turbine is also ongoing. we see this opportunity to optimize the wind turbine, especially the turbine which is dedicated for the offered solution. we see the potential for cost saving. francine: what does battery storage look like? lei: again, battery storage typically this year, for battery

sell used for vehicle or storage dropped 30% cost. which makes it cost competitive. this cost down for the battery, the wind turbine, the solar panel is so important rate it is driving down the total cost of energy. then the green hydrogen is going to be built on such low cost original resources. that's the future for green hydrogen. francine: vn vision chief executive officer joining me at cop28. we will have plenty more interviews from dubai. kriti: francine lacqua at cop28 with an excessive interview. we will have plenty more

including from microsoft founder bill gates telling us that keeping global warming below two degrees is unlikely. he praises the summit for making climate progress despite the geopolitical tensions. we will hear more from our interview next. this is bloomberg. ♪

>> now the most important challenge we have for our security is to control the fundamental supply chains. an energy is one of those. that is white italy is working hard on that. kriti: italian prime minister giorgia meloni speaking on the sidelines of the cop28 on

control of energy supply lines. bill gates saying the world probably won't meet the paris agreement's goal of keeping the rise of global temperature below two degrees celsius. he spoke with francine lacqua at cop28. >> we have to outcompete fossil fuels. now to do that properly, they shouldn't get subsidies. and in fact, a carbon tax over time should be put on so that the new, say the electric car, the fact that it doesn't emit carbon, you are helping it get adoption. those companies have skills. if you want to sequester carbon or nuclear waste, there is a lot of skills if you want to make biofuels. some of those companies will take the capital skills they have.

so i wouldn't say i wish they weren't there. there is no country that can say we have zero emissions. people want to drive to work. in fact, the excess supply when russia cut off its supply, the world was sort of glad that that was available. yes, oil and gas needs to be outcompeted, and those companies need to join the effort. francine: you look at a lot of technologies and innovation, but is there one thing you have been most excited about in the past five years? or that you are most excited about for the future? we talk about nuclear fuel, we talk a lot about the really big, exciting stff. what are you excited about? >> i love all my children. and i have these 100 companies. and i never new that we would get a new way to make steel, or

cement, or beef. it's fair to say that if we can get either nuclear fission or fusion to be safe and broadly accepted, and very economic. because it's not weather-dependent, it would be very complementary to the large amount of solar and wind we are putting into our electric system. so, i'm biased. i'm a huge investor in both fission and fusion. and hoping that it comes in time. we can't count on it. fission has been too expensive. and fusion doesn't exist yet. francine: fusion 15 years from now? i know it's a guess at the moment. >> of the four companies i am invested in, one of them has a critical path. things will have to go well that in the late 2030's they'd be

making electricity and start to scale it up. that's an aspiration but it's a great company and we have three others that aren't quite that early. that are within five top and years about. francine: we are in a strange place in the planet right now because there is a lot of unknownss, there is ai, technology, climate change. do you find leaders distracted? are they still putting climate as a to for? -- top priority? >> we can't have it as our top priority. we still need vaccines and when there is a war, that properly demands attention. even the eight budget for refugees and everything, i wish there hadn't been a pandemic, or ukraine war, or middle east unrest. those are going to take away from the amount of tension we have on continuing to make progress, and climate change.

those are bad developments. if you had only seen 10,000 people come, versus 35,000 last time, you might have said wow, we are really getting distracted. instead twice as many came here including a lot of the big businesses. the signs obviously are that while we still have to deal with those things -- and we have limited resources, so we have to spend them well -- that climate progress is moving ahead. even though we need our highest aspiration. francine: one final question on ai. how does that fit into your vision? >> ai is such a powerful technology. and this recent advance where the ai can basically read and write, that's going to affect every human activity. we're using ai to find new drugs. we're using ai to look at climate change.

and so all of our companies are going to move faster because ai helps them explore different solutions and move a lot better. certainly, for challenges like this, ai is very much our friend. kriti: bill gates speaking with bloomberg's francine lacqua on the sidelines of the cop28 summit in dubai. we will have more from cop shortly. francine will be moderating a discussion featuring the ceos of mcquarrie and standard chartered. scheduled to start around 6:30 p.m. u.k. time, we will bring it live on bloomberg television. coming up next, another exclusive interview with kenyan president william ruto. we discuss renewable power, green sovereign bonds and plenty more. stick with us. this is bloomberg. ♪

kriti: kenya's president is weighing selling green sovereign bonds and debt from nature swap deals to fund climate projects prayed he spoke to jennifer zabasajja on the sidelines of cop28. >> will be looking at three things. we will be looking at nature swaps. that is, we have huge opportunities around nature. we are planting 15 billion trees as i talk to you. we are restoring 10,000 wetlands in kenya. that's all nature swap opportunities to raise resources. number two, we are looking at scaling up. just as i announced here, we are scaling up global energy potential. we want to enhance our renewable

energy potential to 400 gigawatts. >> how do you get there? >> through investment, through anchor demand. we are looking at green industrialization providing the anchor demand for that growth. so that not only supply energy to our citizens, but we are using green energy to power our industrialization potential. we have huge opportunities in ammonia, fertilizer. opportunities in green steel. we have opportunities in many of the other minerals that are available in kenya. and many other opportunities. and we have the same in our region. we are looking at collaborating, for example, with uganda, tanzania, with east africa, burundi. you heard me talk when the president of burundi was there.

how do we collaborate so that we share if you have renewable energy, we have mineral resources, how do we use renewable energy combined with green minerals so that we can create green products? this is the collaboration we are looking at going into the future. >> green sovereign bonds, you didn't answer that question. >> green sovereign bonds is an opportunity. in fact, it is the next thing on the horizon. >> so you are talking about it. >> is the next thing. >> i want your reaction to the loss and damge greement that was agreed earlier in this cop. how would you describe it? is it progress, you want to see more? is it just talk because there is still a lot more to go? >> until this cop, many people, including myself were pessimistic that it was largely talk. i think for the first time, give credit where it is due.

uae and others have come through. they have committed resources and said with clarity that this is real, genuine resources. that is a step in the right direction. is that money enough, i don't think so. there is, of course, a requirement for huge resources. is loss and damage alone going to sort this out? i don't think so also. we need a multiplicity of interventions. we need loss and damage, we need oil commitments, we need to reform the international financial institution, recapitalize them. let us look at how we deal with a credit rating agencies. we need to deal with carbon taxation, carbon credit, carbon markets. it's a whole new intervention that will finally pull us out of

this climate crisis. kriti: kenyan president william ruto speaking to bloomberg's jennifer zabasajja. some other stories from around the world, starting over in asia. chinese developer effort ran getting some breathing space -- evergrande getting some breathing space as the hong kong court postponed lid hearing to january. the developer now has eight weeks to strike a deal with offshore bondholders for what would be wanted of -- one of china's biggest restructuring. alaskan air agreed to buy rival hawaiian airlines in a deal worth $1.9 billion. alaska will pay $18 per share and it includes hawaiian's debt. plus, uber is joining the s&p 500 after reporting two straight quarters of operating profits after a big rally in the rideshare company's shares this

year. prior to his inclusion, uber was one of the largest companies eligible to be added to the index with a market cap of over $118 billion. manufacturing services company jabril and builders firstsrouce are set to join the index later this month. coming up how do we find just energy transitions in emerging economies? we are live at the summit. this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. kriti: good morning and welcome back to "daybreak: europe," i'm kriti gupta in london. israel widens its gaza offensive

as commercial ships face attacks in the red sea. meanwhile, gold jumps to a fresh record and bitcoin surges. investors looking for yield as expectations of a rate cut rose around the world. cop controversy. newly reported comments by the president of the climate summit threw cold water on a potential commitment to phaseout fossil fuels. bill gates says the world probably won't meet its paris agreement goals. >> no, we won't hit the aspirational targets. you can do the math on 1.5, and even 2.0 isn't that likely. kriti: as we are digesting all the developments out of cop, a lot of conversations out of the middle east in terms of geopolitics. we have to get a check on the market straight if you look at figure trading, euro stoxx 50 futures unchanged, but clear

underperformance in the u.k., ftse 100 futures down 0.1 percent. the real pullback is nasdaq 100 futures across the pond, down 0.3%, it is normal but given at this time asian and european traders aren't diving into american assets. you are seeing that in the equities market. what's more interesting is the cross assets picture, specifically, the bond market. look at the two-year yield, higher six basis points when you look at the move. brent crude down in line with risk sentiment as well. look at where the bid is, gold, bitcoin, this idea that if you are looking for yield around the world, you might find it in alternative assets. gold, this idea that they are a store of value that will never lose a position in your portfolio. bitcoin as a alternative to gold higher by 5%. also part of the macro conversation is what is happening at cop28 in dubai. we have full coverage on

bloomberg television and radio. the debate continues over how far wealthy companies should support developing nations in the climate fight. just energy transition partnerships are emerging as an increasingly viable solution. francine lacqua moderating the dream festival panel at the summit. let's listen in. >> is literally 10 meetings a day. bill has his own venue, so he doesn't have to run to them. sorry, we are just cheapskates, we just run to everyone. but it is fantastic getting to do the meetings. everything feels like it moves the dial when we talk with these people. francine: i'm sure bill has also done eight kilometers but he just does not want to say. >> next year. francine: when you look at private financing, this is

mobilizing it, scaling it, using it. if you look at those three things, where is it harder, to find the money, or use it? >> right now, it's use it, because the underlying standards that we're all shooting for, that will make it clear what's a good project is still being scoped out. as a bank, we set the objective of mobilizing $300 billion of capital over 10 years. we are almost at 100. not to be too mercantilist about it, but we targeted earning income of $1 billion over three years. so, well on track. what does that mean? there is a ton of underlying activity. this is all without a functioning carbon market, which is a necessary ingredient for the next step. when i say it is nonfunctioning, it is very small relative to what it needs to be. we don't have time to talk about

it but we can establish an underlying set of confidence in the standards being set by the integrity council and others, and then layer that on top of the existing sustainable finance work that happens. and make huge strides in terms of mobilizing capital, but we have to get these pieces together. >> i agree as well. there's a huge amount of money there, but we have to create investable projects. that money is the money a pensioners and savers around the world where the people entrusted, the custodians, have a duty to deliver return for the risk. they can't just write checks. we have to create investable projects where we de-risk things and that involves government setting frameworks, it involves mbd's and philanthropies doing first-class investment or guarantees, but it involves us coming out with domestic operators and financiers and our own skilled projects where we

can drive social outcome but also financial outcome. not just for the investors but the communities we're investing in. as an example, if you look at southeast asia, they have a lot of new build coal that is f irmed, baseload energy that is so important to living standards of people in their communities. if we want them to move away from that, we have to create solutions that can drive economic outcomes as well as the social. that is where the challenge is. sadly, early on, we are having to go country by country, sector by sector, create solutions that can be scaled. that, to me, feels like -- they are both hard work, finding capital, but also about projects. francine: when you look at the projects, what's the biggest barrier? visit regulation, is it that we haven't figured out how green some of these projects are, or is it time? >> the pathways are different

for every country. so, it's tailoring solutions, and you have to go in the trenches and do this. we have experienced this as we have built infrastructure for all these different parts of the world, that it requires just detailed focus. there are a whole lot of countries where renewable is the cheapest source of energy. brazil, paraguay, kenya, drc, nepal, those places it's easier to get this going because they are the default choice of rational actors, but as i said, it is southeast asia, it is challenging. india has a different pathway. and no one of us can get this done alone. but that, i think, is the issue, is tailoring it to drive the outcomes and there just isn't a magic bullet. francine: bill, are these projects concentrated in certain countries? >> some project types are externally well-established.

renewable power that is economic in its own right is pretty straightforward in most countries. when we look at often some of the larger, but more complicated projects that get stuck in terms of connection through to asset management pools, for example. or huge pools of esg money that has been set aside. it isn't highly specialized in taking political risk, or local fx or project-level risk at the development stage. in other markets, there has been quite a refined system, in some cases, of public sector catalytic type of support and others specialized private sector support, or insurance companies that have been set up to parcel out this risk and get complicated projects done. in a lot of the sustainable infrastructure space, especially given the pace of development, it is not fully vetted down yet,

which is why you hear so much about blended finance and the roles that mbd's can play in providing a relatively small amount of linchpin capital that can unlock a transaction. which is why when i listen on this stage, there is nobody more committed to getting this right. and making the world bank an extremely effective contributor. but he has real constraints in terms of his charter. the world bank have their set of activities. the international development bank has done some fabulous and progressive things, etc., etc. we just need to get that together, perhaps together with the blackrock uae managed money. and perhaps that gets replicated 10 or 12 times in different formats to provide that linchpin capital that is preventing the market from fully realizing his potential. francine: is there enough collaboration between the groups?

>> definitely. bill was mentioning our partnership with the private investment lab with the world bank where he has given us have a deadline of april next year to solve the problem of the world. but he is doing awesome work in terms of unlocking all this mbd capital because there are all sorts of bottlenecks. he is looking at how we can get guarantees done in a more standardized way. as like fx protection, securitization, etc. the solution is coming up with a super practical that will drive the culture of the organizations to delivery. we from the bottom up after her with these organizations to get the money flowing. bill was just saying, which is right, that solar, offshore, onshore wind are pretty much the cheapest forms over noble. a lot of the power that has been added this year, 60% of it has

been solar because it is the default choice of the rational actor. even in the emerging economies we are putting on a giga a lot of power around the world but it is intermittent. kriti: conversation happening around some of the environmental stories and what that mean for not just trade but the geopolitical conversation. but it's not just in the banking space. you aeing this around the world, which brings us to our top story. french president emmanuel macron has weighed in on a major trade deal between the uae and south american economy saying the environmental concessions fall short of what is needed. as the brazilian president lula da silva arrives in berlin for further talks. maria tadeo is all over this story. maria, this feels like it would be a massive free-trade agreement between two massive trading blocs of the world.

maria: it is fair to assume that the mercosur will not be signed this year. that was the hope of president lula who will be in germany today. he will meet with the german government. as i said, it is almost a safe bet now to say that the mercosur will not happen. fundamentally, there is two reasons. one is the french president is saying on the latin american side -- it includes both brazil and argentina -- there are issues when it comes to green targets, sustainability where they still need to do more work. the second issue we are told is simply a matter of timings. brazil has the presidency of mercosur until the end of this week, but the other pillar to the deal is argentina. the country had an election a few weeks ago and is in the midst of a government that is leaving, and another one that is

incoming. it is unclear what the new argentine government will be when it comes to mercosur. so again, this would be a massive free-trade agreement. as you say, it would connect two big blocs, but the expectation that something could happen this year, it is fair to assume now that it will not happen before the end of the year. that does not mean that the deal is dead. when you look at mercosur, you could argue it is a zombie, it never gets fully done but it is not fully dead. nonetheless, when it comes to deadlines, it is unclear when the next breakthrough will happen. kriti: 27 days left until the new year, we will see if it comes through. what might it take to salvage the deal? maria: it is very difficult. certainly not for this year. overall when you read the mood music, it was interesting to hear the words of president lula over the weekend.

he had been optimistic. he wanted to get it done while he was the president of mercosur . he was yesterday more cautious, saying it is moving in the right sense, but maybe not this year as he had hoped. fundamentally, there are questions that need to be resolved. the biggest is argentina. what is their take on this deal? we have seen argentina suggesting that relationships with brazil could be better. also perhaps changing their approach to mercosur when it comes to the european side. the head of the european commission says the eu is still committed to get this deal done, but as you see, this is still a massive stumbling block. this is one of those deals that is perennially always in the background, nonetheless, both sides say they continue to work on it. the question is when do they get it signed? again, this year seems unlikely. kriti: maria tadeo all over that story. we are watching these two major trading blocs and the future between them. coming up on the program, we

stick with the economic story, except this time in the united states who the u.s. labor market in focus this week. what to expect from friday's data, how much of a difference it will make to the global rate story. stick with us. this is bloomberg. ♪

kriti: some pretty sanguine economic story here. not driving the equity market much. 27 days until the new year. how do you play the monetary policy? we are feeling it is kind of on repeat. this idea of higher for longer, but rate cuts priced in by the markets, how much of this is on par with what jay powell and his global peers are thinking? who better to enter that question then the chief economist at ada economics, joining us bright and early

onset. when you look at the yield picture, famously, jay powell has said the last couple of months we have seen a selloff in the long end, that it has done work for the federal reserve. you heard from andrew bailey and christine lagarde, even the boj said it is all about that selloff in the 30-year. how much of that is true? how much work did it really do for the central banks? raffaella: good morning and happy monday to everybody. it's a pleasure to be here. the bond market rally does imply some easing of monetary stance, but from highly restrictive. it's not going to really be enough. we think that 100 basis points is where you really need to avoid a significant downturn in 2025. more so in the eurozone than in the u.s., but in general what you have seen is not enough. it's allowing this relatively long lag between tight monetary

policy and a slowdown in the economy to get a little bit of respite. but it isn't a real game changer. kriti: what does that do in terms of the terminal rate? this idea that for a while there was a lot of conversation even by jamie dimon who said maybe we need to pull that rate to 6%. there was folks in the market who said 7% may be on the table. >> i would say by and large, yes. i don't think it makes any sense to really tighten monetary policy anymore. we think inflation is going to be perfectly in line with the target of the fed already early next year. in fact, it may even undershooting the target. so what is the rationale in any case? we live in a historical time of climate change where you need investment. and a lot of investment has to be frontloaded into this decade. so again, what is the rationale of trying to push it too hard,

when every time you keep monetary policy too tight, you are foregoing vital capex which will help finding climate change which is in turn an inflationary event. kriti: critics would say that in itself is quite inflationary, this idea that even though in europe it is both economically encouraging to lean into green energy. it's cheaper, it removes reliance on russian gas, for example. on the other hand, if you look at the united states or asia, it is still economically cheaper to invest in fossil fuels. to drill more oil, to not lean into the green story. that was one of the criticisms of even biden's infrastructure plan. what is your thought process on whether it right time for this green investment given we are still fighting inflation? raffaella: i would say two things, first on the question of

inflation. we have been talking about how inflationary is this decade for three years running, so i haven't really changed my mind. but inflation requires an element of demand. at this stage, because monetary policy has been tightened, demand is waning. it is actually completely stagnating in recession in the euro zone. inflation risk right now is not there. in fact, if you push rates for too long, if you don't get a rate cut by june, we could be talking about deflation by 2025. right now the inflation story is not pressing. the other issue is central banks have been given a partial mandate to accept climate change in their financial stability, but not in their real operational mandate in the longer run. i go back to productivity which ultimately shapes inflation in the long run. if you never get to invest in climate change enough, you will never get at the productivity gains.

i think debate is stuck right now because we haven't fully internalized the transition. perhaps because we haven't decided that we completely agree on this. we see 2024 as they year of transition. when we have enough time to kind of think it through and operationalize it, otherwise we will miss it. kriti: we are talking about this restrictive effect monetary policy has had, surprise, surprise. but how long for that to kick in? it feels like the economics 101 take is a 12 to 18 months lag, shorter in the united states, longer in other parts of the world, what is your number for how long that lag takes full effect? raffaella: i go back to my inflation forecast. if inflation is at target this year, then it has happened. in a big amount, target being 2%. in my experience, what we're

preserving is not necessarily the lag is long, and the impact on the whole economy is the same. different sectors have been affected differently. the bottom part of the income distribution is already in a tight situation. it is running down savings. the upper part of distribution benefits from better debt structure and higher cash structures, so that has probably doubled, if not tripled the normal lag. corporates are barely feeling any impact. corporates that are small are already cutting back. i go back to my june deadline. in my head, if we don't get a cut from the ecb and fed by june, we will seriously see a wave of bankruptcies into 2025 and 2026. kriti: quite the call. six months, we will see if you are right. doomsday scenario to brighten up your monday morning.

the founder at 88 economics. 20 more to come. this is bloomberg. ♪

kriti: we have been talking a lot about bond volatility. equity markets started to quiet down, we are getting into the holiday period, the bond market still shaky. six-basis point move on the front end and the u.s. market just overnight. what does that mean for the dollar? even though you see volatility in the rates market, it doesn't necessarily translate to the dollar. the dollar continues to weekend. this chart shows it quite well. when you look at macro exposure, it is very bearish. continuing to see those bearish bets build instead of come back, even though we are talking about maybe these cuts aren't going to manifest.

it doesn't seem like the market agrees and that's a big piece of it. does this create a tailwind for the euro and pound, even though we are talking about fiscal deficits for a lot of these european economies? it comes down to the dollar and that positioning is fairly bearish for the greenback. up next, markets today joined by tom mackenzie and mark cudmore to walk you through the european market open. this is bloomberg. ♪

kriti: this is "bloomberg markets: today." mark cudmore is our executive editor to take us through all of the market action. tom: